Black Hills (NYSE: BKH) and Avangrid (NYSE:AGR) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Valuation and Earnings

This table compares Black Hills and Avangrid’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Black Hills $1.57 billion 1.99 $72.96 million $2.62 22.33
Avangrid $6.02 billion 2.73 $630.00 million $2.15 24.68

Avangrid has higher revenue and earnings than Black Hills. Black Hills is trading at a lower price-to-earnings ratio than Avangrid, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Black Hills and Avangrid’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Black Hills 8.47% 10.47% 2.86%
Avangrid 11.23% 4.60% 2.22%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Black Hills and Avangrid, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Black Hills 0 3 5 0 2.63
Avangrid 1 1 4 0 2.50

Black Hills currently has a consensus target price of $68.13, suggesting a potential upside of 16.43%. Avangrid has a consensus target price of $47.50, suggesting a potential downside of 10.50%. Given Black Hills’ stronger consensus rating and higher probable upside, research analysts plainly believe Black Hills is more favorable than Avangrid.

Volatility and Risk

Black Hills has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Avangrid has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.

Insider & Institutional Ownership

95.3% of Black Hills shares are held by institutional investors. Comparatively, 13.8% of Avangrid shares are held by institutional investors. 1.1% of Black Hills shares are held by insiders. Comparatively, 0.3% of Avangrid shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Black Hills pays an annual dividend of $1.90 per share and has a dividend yield of 3.2%. Avangrid pays an annual dividend of $1.73 per share and has a dividend yield of 3.3%. Black Hills pays out 72.5% of its earnings in the form of a dividend. Avangrid pays out 80.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Black Hills has raised its dividend for 47 consecutive years.

Summary

Black Hills beats Avangrid on 11 of the 17 factors compared between the two stocks.

Black Hills Company Profile

Black Hills Corporation is a holding company. The Company is an integrated energy company, which is focused primarily on regulated utilities. The Company operates through segments, including Electric Utilities, Gas Utilities, Power Generation, Mining, Oil and Gas, and Corporate. As of December 31, 2016, the Electric Utilities segment generated, transmitted and distributed electricity to approximately 208,500 customers in South Dakota, Wyoming, Colorado and Montana. The Gas Utilities Segment includes the natural gas operations of Cheyenne Light. The Power Generation segment produces electric power from its generating plants and sells the electric capacity and energy principally to its utilities under long-term contracts. The Mining segment operates through its Wyodak Resources Development Corp. (WRDC) subsidiary. The Company’s Oil and Gas segment acquires, explores for, develops and produces natural gas and crude oil in the United States primarily in the Rocky Mountain region.

Avangrid Company Profile

Avangrid, Inc. is an energy and utility company. The Company operates through three segments: Networks, Renewables and Gas. The Networks segment includes all the energy transmission and distribution activities, and any other regulated activity originating in New York and Maine, and regulated electric distribution, electric transmission and gas distribution activities originating in Connecticut and Massachusetts. The Renewables segment owns, develops, constructs and/or operates electricity generation, including renewable and thermal generators, and associated transmission facilities. The Renewables segment includes activities relating to renewable energy, mainly wind energy generation and trading related with such activities. The Gas segment operates a natural gas storage and natural gas trading business through its subsidiaries, Enstor, Inc. and Enstor Energy Services, LLC.

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